Net profit for April-June amounted to 1.76 trillion won (S$2.1 billion), down 1.5 per cent from a year ago, while operating profit inched up 0.6 per cent to 1.76 trillion won, Hyundai said in a statement.

The firm's quarterly net profit has fallen since early 2014 due to slowing sales in China and growing competition in global markets against Japanese rivals benefiting from weaker yen.

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The firm said it had sold 2.39 million cars in the first half of this year, down 1.0 per cent from a year ago, and warned of more challenges ahead including fallouts from Britain's shock exit from the EU.

"We believe that we would face more difficulties in the latter half of this year as uncertainties grow in the wake of Brexit and the global growth outlook is being cut," it said.

Hyundai has struggled to expand its presence in the fast-growing Chinese car market - the world's largest - by pushing sales of popular sports utility vehicles there.

But growing diplomatic tensions with China over the deployment of a US anti-missile system - known as Thaad - in South Korea may anger Chinese consumers and dampen Hyundai's sales, said Shin Jae-Young, analyst at LIG Investment and Securities.

"Hyundai's future prospect looks murky as its sales in China may get hit by the deployment of the Thaad," Mr Shin said.

Companies including Apple and Japanese firms have occasionally been targets of boycott campaigns by Chinese consumers at times of diplomatic tension with Washington or Tokyo.

Other analysts raised concerns over rising marketing and research costs as Hyundai struggles to catch up with bigger rivals in the nascent but growing market for environmentally-friendly vehicles, including electric cars.